LED Manufacturers Settle Patent Lawsuits

Color Kinetics Inc.and Super Vision International have
reached a settlement on their various patent lawsuits,
ending an episode that at one time caused a rift in the LED
industry.

In 2002, Orlando, Fla.-based Super Vision filed against
Color Kinetics, seeking to invalidate some of its patents.
Super Vision claimed that four technologies —
including one pool and spa application — were
produced by others well before Color Kinetics received its
patents. Boston-based Color Kinetics quickly filed a
countersuit for patent infringement.

The issue had the LED lighting industry up in arms.
Approximately 250 producers and inventors rallied around
Super Vision, forming the LED Alliance. The group accused
Color Kinetics of trying to hold existing technologies
captive so that it could charge licensing fees. Color
Kinetics now holds 58 patents and has 170 more pending.

In 2005, a Massachusetts court issued summary judgments
in favor of Color Kinetics, and ordered Super Vision to pay
$1.57 million in attorneys’ fees and costs. In
November 2006, the Massachusetts court permanently enjoined
Super Vision from producing or selling products that were
determined to have infringed Color Kinetics’
patents.

As part of the new agreement, announced in December, the
companies settled on a reduced fee in lieu of the $1.57
million. Super Vision will drop its infringement claims
against Color Kinetics regarding a patent known as the
’687 patent.

For its part, Color Kinetics will grant licensing rights
for its entire portfolio to Super Vision, in return for
which Super Vision will pay royalty fees. With this
settlement, Super Vision can continue making products that
had been considered an infringement. Color Kinetics will be
allowed a license to the ’687 patent, free of
royalty fees.

Bill Sims, Color Kinetics’ president/CEO, said
that maintaining an expansive patent portfolio has always
been a goal of the company. “We choose not to
exclude players from the field, but rather, enable the
market through an active licensing program,” he
stated.

Super Vision President/CEO Mike Bauer, who inherited the
lawsuits when he took his post in January, said his firm
now can focus on growth. “[The lawsuits] have been
what I call a legacy issue that had been costing the
company a lot of money in attorneys’
fees,” he said. “My net vision and goal
for the company was to get it where it had a clear future
without having to be tied up in court.”

At a time when LED lighting has hit its stride, with
sales jumping from $100 million to $1.4 billion between
2000 and 2005, Bauer said the companies have more important
matters to address. “I think there are a lot of
things that we can do, working together, to really help the
LED market expand and grow vs. spending our time in the
courtroom,” he said.

Looking to the future, Super Vision has sold stock in
the company to raise $9 million to put toward implementing
a new strategic plan.